Govt aborts UMPP bidding on tepid pvt sector response

The government has scrapped the the bidding process for two ultra mega power projects...

The government has scrapped the the bidding process for two ultra mega power projects (UMPPs) in Odisha and Tamil Nadu, as private developers withdrew from the fray citing difficulty in securing bank finance due to the flaws in bidding norms.

Addressing mediapersons, power and coal minister Piyush Goyal conceded that the current bidding criteria do not provide for a level playing field to developers and added that an expert committee to be formed soon would review sticking points in the criteria.

“A section of developers is not happy with the bidding criteria and they have found it difficult to secure finance for projects. The bidding document is also unfair to developers as it provides several exit routes for procurers but none for the developers,” Goyal said.

The current stance of the ministry is in line with the recommendation from the Suresh Prabhu-led advisory group that, as FE reported, had said that the previous bidding norms that allowed developers to own the project be reintroduced but with unlimited pass-through of fuel costs based on actual escalations.

The revised Case 2 norms as per which the bids were invited for the two UMPPs mandated that the developers transfer the plants to the state government after the contract tenure of 30 years. Fuel pass-through was allowed as per a formula linked to inflation and debt mitigation but a cap was proposed on the pass-through. The Prabhu group, which found these impractical, said that adopting previous norms with some changes would expedite the bidding process for both UMPPs that have been hanging fire for nearly 2 years.

For the Tamil Nadu UMPP, the private companies in the fray were Adani Power, CLP India, Jindal Steel & power, JSW Energy, Sterlite Energy and Tata Power. Of these, four bought the Request For Proposal document but decided not to go ahead further in the process.

The Odisha UMPP saw nine interested bidders, including Adani Power, CLP India, GMR Energy, Jindal Steel and Power, JSW Energy and Sterlite Energy. After the private companies pulled out, only state-run NTPC and NHPC were left in the fray.